Bulls showed up on Wall Street rested and ready after the long
Thanksgiving weekend. Early reports for a strong opening to the
holiday shopping season had investors in a buying mood. News
that the ISM numbers hit 20-year highs merely fanned the flames.
The NASDAQ hit a new 22-month high while the DJIA and the S&P 500
hit new 18-month highs.

U.S. stocks weren't the only ones in the green. The Japanese
NIKKEI average jumped 3 percent or 302 points to close at 10,403.
The Hong Kong Hang Seng followed with a 139-point rise to 12,456.
European stocks fared almost as well with a 1.55% rise in the
British FTSE 100 and a 2.01% jump in the German DAX. A Reuters
manufacturing survey in Europe also reported improvement
suggesting the recovery could be spreading from the U.S. to other
nations.

The 116-point gain for the Dow Jones Industrial Average (DJIA)
placed the index just under the 9900 level. A strong showing in
technology stocks pushed the NASDAQ to an arm's length away from
the 2000 level at 1989. The S&P 500 actually hit new intraday
highs and broke out over the 1060-1063 region to close at 1070.
Monday's rally was very broad-based with not one sector index
closing in the red. Out performing to the upside was the BTK
biotech sector, which rose 4.25%. The move was fueled by news
that Protein Design Labs (PDLI) had settled a patent dispute with
Genenetech (DNA). This sent shares of PDLI soaring 22.79% to
$17.02. The DJUSHB home construction index was the next best
performer, up 2.51%. Homebuilders enjoyed a strong day after the
strong construction numbers came out this morning. The third
best sector index today was the XAU gold & silver index, up
2.32%. Gold stocks rose strongly as inflation concerns and the
dollar's decline pushed gold futures to a 7-year high up $5.80 to
$403.80 an ounce.

Market internals were very bullish with the NYSE reporting 21
stocks gaining for every 7 losers. The NASDAQ's advance/decline
ratio was also a bullish 2:1. New highs soared to 889 between
the two exchanges compared to just 16 new lows. Up volume was
more than 4 times down volume on the NYSE and 2.6 times down
volume on the NASDAQ. Total volume was a decent 3.4 billion for
both the NYSE and NASDAQ.

Chart of the DJIA:

Chart of the NASDAQ

Chart of the S&P 500

According to ShopperTrak the holiday shopping season is off to a
good start. Store parking lots were full and consumers were in a
spending mood. Retail sales for "Black Friday", the day after
Thanksgiving, were up 4.8 percent to $7.2 billion. ShopperTrak,
who combines Commerce Department data with its network of 30,000
store traffic monitors, was upbeat for the 2003-shopping season.
Friday's 4.8% gain is pretty strong considering that it is being
compared to last year's Black Friday, which was up 6.8% from
2001.

Retail titan Wal-Mart issued its own Black Friday numbers and
they were staggering. The retailer sold $1.52 billion in
merchandise on Friday alone. That means $1 out of every $5 spent
on Friday ended up at WMT. The $1.52 billion number is a new
one-day sales record for WMT but the stock ended the day down 2%
as the biggest decliner in the DJIA and the heaviest drag on the
S&P 500. A couple of analysts were concerned that WMT's results
weren't stronger. The year over year 6% gain looks good but WMT
had increased its square footage by 7 to 8 percent so
expectations had been set pretty high.

Overall the initial sales data was encouraging not only for its
gains but because consumers appeared to be moving beyond discount
items. Higher-end stores showed improvement and that's a great
vote of confidence by the consumer. Unfortunately, it may be a
facade. Visa USA reported that sales using Visa credit and debit
cards for the Friday and Saturday after Thanksgiving soared 12%
from last year to more than $6.5 billion.

The biggest event today was the November factory activity index
numbers by the Institute for Supply Management. Economists had
been looking for an increase from 57 percent in October to 57.9
percent in November. What we got was a jump to 62.8 percent in
November, making it the best month since December of 1983.
Readings over 50 are signs of improvement and expansion while
readings under 50 are read as declines and a contracting economy.
The new orders component also hit a 20-year high rising to 73.7
percent in November from 64.3 percent in October. The ISM
backlog of orders component rose to 59 percent up from 53.5
percent in October. The ISM production component rose to 68.3
percent from 62.6. One of the most encouraging increases was the
3.3 percent jump in the ISM employment index. This component
jumped from a negative 47.7 percent in October to a 51 percent
reading in November. It was the first time factories had hired
new workers since September of 2000 and it bodes well for this
Friday's employment report. The Institute said November was the
fifth consecutive month of growth for the manufacturing sector
and the 25th consecutive month of growth for the overall economy.
You can read their report here:http://www.ism.ws/ISMReport/ROB122003.htm

Overshadowed by the ISM report was a positive construction
spending number from the Commerce Department. Economists had
been looking for a rise of 0.7 percent growth and the report
surprised with a 0.9 percent increase. This set total
construction spending to a record high annual pace of $922
billion. The news was not lost on homebuilders, which sent the
DJUSHB index to a new all time high.

I was a little surprised that the SOX semiconductor index didn't
perform better today. The Semiconductor Industry Association
(SIA) reported the strongest monthly gain in 13 years with
October chip sales surging 23 percent to $15.4 billion. SIA
President George Scalise commented on October's performance by
saying the recovery is broad-based and from "all geographic
markets" and "all product sectors". The SOX index did hit a new
intraday and closing one-year high but the gain was a muted 0.6
percent.

One of the biggest stories today was that of Boeing's CEO Phil
Condit stepping down after 38 years at Boeing. Last week Boeing
(BA) was hit with scandal when it fired its CFO Mike Sears for
violating company policies. Allegedly Sears improperly
communicated with an Air Force officer Darleen Druyun about
future employment with Boeing while she was still acting as a
government agent in the now controversial tanker-leasing
contract. Condit claims he was not involved in anything
unethical but agreed to resign after pressure from the board of
directors. To replace him Boeing is waving the mandatory
retirement age of 65 and calling on former BA employee Harry
Stonecipher, currently 67 years old. Stonecipher had been the
CEO of McDonnell Douglas before the company merged with BA.

Aside from the Boeing resignation it was a scarce day for bad
news and investors may have been relieved to make it through the
whole session without hearing more from Wall Street's mutual fund
scandal. We may not be so lucky tomorrow. Looking ahead to
Tuesday it will be interesting to see if buyers are willing to
keep the momentum going in the NASDAQ and finally tag the 2000
mark. Meanwhile the DJIA has yet to conquer its battle with the
9900 level.

Traders will want to keep an eye on the bond market. It was
suggested that today's bond weakness was a combination of
inflation concerns and money rotation out of bonds and into
stocks. The strong ISM data today combined with the dollar at
new lows and spiking commodity prices has many speculating that
the Federal Reserve may be forced to raise rates sooner than
expected. While no one expects a rate hike at next Tuesday's
FOMC meeting the financial world will certainly be focused on
their comments.

As you may have heard December has a very strong history in favor
of the bulls. The Stock Trader's Almanac documents that over the
past 50 plus years December is the best month for the S&P 500 and
the second best month for the DJIA. Now 2003 hasn't been the
best year for trading seasonal trends but it's nice to know that
the markets will be cruising toward 2004 with a tailwind.